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… is from page 128 of David Schmidtz’s excellent 2023 book, Living Together (footnote deleted):

Robert Frank once reported being baffled that I would reject modest redistribution from rich to poor. Amartya Sen intervened at that moment and told Bob he needed to listen. Affluent scholars see a pie and see how they want to slice it, but Sen saw me starting in a different place – with the truism that power corrupts. Starting from that truism, what is baffling is that anyone could so cavalierly endorse concentrated power when we live in a world where concentrated power is so often used to redistribute not from rich to poor but from poor to rich. Sen went on to say that when it comes to inequality, the question is not whether we can find a statistic that gives credence to the resentment the richest scholars feel as the richest movie stars leave them behind, but which dimensions of rising inequality do poor people care about?

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Arnold Kling is understandably unimpressed with economists’ understanding of business. A slice:

Economists treat “the firm” as if it were a single, cohesive unit. In 2016, Bengt Holmstrom and Oliver Hart won a Nobel Prize for undertaking analysis of just one internal conflict—that between a manager wanting performance and a worker preferring to shirk. But in the real world, a business is a cauldron of conflicts.

John O. McGinnis reviews Ingrid Robeyns’s “case against extreme wealth.” Two slices:

Politically, she contends that the state should limit individuals to a net worth of 10 million dollars. Ethically, she claims that moral individuals should possess no more than a million dollars’ worth of assets.

Her arguments are not at all convincing, but they are clarifying. While the left’s interest in progressive taxation can be reconciled with a market society, even if it reduces economic growth, proscribing wealth would lead to a society with little or no growth. While the left’s interest in creating more equality of opportunity can be reconciled with liberalism’s priority on human autonomy, Robeyns’ contentions are deeply illiberal and depend on her own unimaginative prescriptions for human flourishing. Unfortunately, given the prevalence of the swing against the rich, friends of liberty will hear more such arguments and need to be prepared to refute them.

…..

Robeyns appears to think “intrinsic motivations” rather than external rewards will be enough to keep the economy humming but she provides no evidence for this. Intrinsic motivation has not permitted even small-scale socialist experiments to endure. Even the higher tax rates in Europe that are far lower than what would be necessary to eliminate the rich—depress the levels of work and innovation there compared to the United States.

Wall Street Journal columnist Mary Anastasia O’Grady writes insightfully about Brazil and Elon Musk. Two slices:

In modern liberal democracy, free speech acts as a check on absolute power. The executive has the bully pulpit, but the public’s access to contrarian points of view contributes to the vibrancy of political debate. Brazil’s constitution protects civil liberties, and free expression has been a Brazilian value since the country returned to democracy in 1985.

That is, until Lula and his Workers’ Party got caught with their hands in the cookie jar and Lula went to jail in 2017. The largest graft and bribery scandal in Western Hemisphere history exposed the criminality of the political class and its business-community friends. In 2018 Brazilians elected President Jair Bolsonaro, an outsider who promised to clean house.

Mr. Bolsonaro is a former army captain with a lowbrow style who can be crude. But that alone doesn’t explain why a good part of the country has come down with Bolsonaro Derangement Syndrome. Lula can also be vulgar.

Mr. Bolsonaro’s main transgression was his pledge to protect private property, restore law and order, and challenge identity politics. He was supported by social conservatives, libertarians, the working and middle classes, entrepreneurs and farmers, all of whom were tired of democratic socialism. Many were willing to overlook Mr. Bolsonaro’s flaws in exchange for getting rid of the Workers’ Party. The legacy media calls them “the far right.”

As president Mr. Bolsonaro was far from a champion of free markets and his language was often reckless. But his administration restored fiscal sanity, deregulated parts of the economy, and made doing business less onerous through digitization

……

Brazil’s Congress has failed to pass legislation that empowers the court to ban what it subjectively brands “fake news.” But the court continues to demand that platforms block speech. On April 6 Mr. Musk rebelled, tweeting that while Twitter has “informed” accounts that it was told to block, it doesn’t “know the reasons these blocking orders have been issued.” Nor does it “know which posts are alleged to violate the law” and it’s “prohibited from saying which court or judge issued the order, or on what grounds.” Twitter is “threatened with daily fines if we fail to comply,” he said. Last week he lifted the block on some users. He also threatened to release his communication with the court, an accounting Brazilians deserve to see.

Professor Michael Way’s letter in today’s Wall Street Journal points to a real problem:

Nothing makes clearer to me the degree to which government influences and meddles with business than to learn that Intel has a “chief government affairs officer” (Letters, April 10). True capitalism may not be dead yet in the U.S., but it is on life support.

Prof. Michael H. Way
California State University, Bakersfield

Pierre Lemieux ponders incentives.

John Cochrane speaks to APEE. Two slices:

Economics is about incentives. We don’t have much to say really about transfers. Our expertise, our claim to truth that applies to everyone, is the analysis of incentives.

Politics is all about transfers. Government grabs resources from A and gives them to B, or distorts markets to benefit B. Look at any discussion of taxes. The newspapers are full of who gains or loses $100, but practically silent on incentives to work, save, invest. In many ways, managing transfers by force is the point of government.

This is all good news. In a discussion that is essentially about transfers, we can pop in, say “excuse me,” and have something genuinely different to say, rather than just jump in on the partisan scales of who gets what.

…..

Another weakness is that we are boring. Many politicians want a New Big Idea as a core of their propaganda racket with a new name. Make America Great Again. Bidenomics. National Conservativism. Anti-Racism. To this cage fight we bring, “Remove the Regulatory Roadblocks in Real Estate Permitting. “New” on the package is the first lesson of marketing. “Stimulus,” write everyone a check, makes great politics. But our national life is a hoarder’s nightmare. We need a patient Marie Kondo cleanup, not stimulus. First the sock drawer, then the kitchen cabinets, and maybe next month we can look inside the garage.

We should stay boring. We should not bend to the desire for power and influence, to serve as the ideological fountain for people who strive for power. That is not the way our ideas will advance. They will find us when the time is right, as Reagan found Friedman.

Our ideas also seem old, and politics demands the fresh and new. But our ideas are better because many are old and well tested. Just because force = mass times acceleration is an idea from the 1670s doesn’t make it any less applicable today. Just because Adam Smith and David Ricardo showed tariffs were dumb centuries ago doesn’t make tariffs any smarter today. Old well-tested ideas make a lot better policy. One of my greatest annoyances is economists who fly to Washington with a clever new idea for Washington to spend a few trillions of dollars; the same Washington that can’t get a the existence of a supply curve, a budget constraint, or trade balance identity (trade deficit = capital inflow) straight. Policy should get the simple tried and true right, as boring as that might be for whiz economists.

el gato malo tweets: (HT Jay Bhattacharya)

i remember in feb and march of 2020 being astonished by this lockdown idea and loudly yowling “do you have any idea what shutting down the world for 2 weeks would do to global supply chains and economic function?”

it did not even occur to me that anyone would be crazy enough to try it for months or years at the expense of small business, social fabric, and education.

it was simply such an insane idea that my mind could not compass the notion that someone would try it or that anyone would go along with it if they did.

i think a number of us suffered from a similar failure of imagination. there was a pervasive sense among us that there was just no way that the “people in charge” could be this stupid, barking mad, and hopelessly corrupt and self-absorbed or that society could be so easily panicked into a stampede of self-enforcing submission to collective delusions.

it turns out that the intersection of milgram and ash is a very dangerous place for society.

it turns out that propaganda works.

and it turns out that “the experts” are anything but.

the question that remains is “did we generate the societal antibodies to resist the next one?”

a significant part of that is resisting this historical re-write of “mistakes were made, but no one could have known.”

they could. they did. and they will again.

but alone, that does not amount to much.

you get run over.

it’s who society stands behind that decides whether or not “people knowing better” matters.

choose well.

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… is from page 205 of the original edition of Walter Lippmann’s sometimes deeply flawed but profoundly insightful and important 1937 book, The Good Society:

And so I insist that collectivism, which replaces the free market by coercive centralized authority, is reactionary in the exact sense of the word. Collectivism not only renders impossible the progressive division of labor, but requires, wherever it is attempted, a regression to a more primitive mode of production.

DBx: Yes.

Show me an advocate of full-on socialism and I’ll show you someone whose preferred policies, if implemented, would destroy modern civilization. Show me an advocate of partial socialism – for example, an advocate of industrial policy – and I’ll show you someone whose preferred policies, if implemented, would inflict great damage on modern civilization, with the amount of damage being a positive function of the extent to which the industrial policy displaces market-directed allocations of resources.

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Andrew Heaton on greedflation-shrinkflation-inflation.

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Scott Lincicome clarifies the ‘China Shock.’ Four slices:

Reading those summaries, you will inevitably think that 1) the China Shock was driven mainly by U.S. trade liberalization; 2) it devastated the U.S. economy, destroying more 2 million American manufacturing jobs and causing widespread social problems too; and 3) that these widespread harms are settled economic canon. Wanting the government to thwart another round of such devastation today—including via tariffs—would be an understandable response.

But there’s only one problem: Almost none of what I just said about the China Shock is actually correct.

…..

More importantly, economists have repeatedly found that other factors—not PNTR or China’s WTO accession—were the main drivers of the China Shock. Economists Kyle Handley and Nuno Limão, for example, found that PNTR’s reduction in trade policy uncertainty accounted for only about one‐third of the growth in Chinese exports to the United States between 2000 and 2005. Mary Amiti and colleagues foundsimilar results, attributing approximately two‐thirds of the trade effects on U.S. manufacturing not to PNTR but to China’s own tariff reductions, which counterintuitively make exporters more competitive. (Preliminary results from a new group of economists suggest that—again contra the narrative—China reduced domestic tariffs by a greater amount than was expected for nations joining the WTO.) Even the China Shock papers by Autor, Dorn, and Hanson (I’ll refer to them as ADH going forward) emphasize that China’s internal reforms—on privatization, trading rights, and (again) import liberalization—were the major contributors to China’s export surge in the late 1990s and 2000s.

In short, PNTR probably accelerated Chinese exports to the United States by reducing tariff uncertainty, but it was China’s own market‐based reforms—policies beyond U.S. officials’ control and ones China critics should cheer—that were the China Shock’s biggest drivers.

…..

First, the figure of 2.4 million lost jobs during 1999 and 2011 was the authors’ maximum (“upper bound”) estimate, with the more likely scenario (“central estimate”) being only about half that number. Just as importantly, only half of those job losses were in manufacturing—all the others were in local and supporting services. Those jobs matter too, of course, but common claims that the China Shock destroyed 2 million or more American manufacturing jobs are—by even the authors’ most extreme estimates—just plain wrong.

Second, the ADH papers focus strictly on job losses incurred by specific local labor markets because of the China Shock—they don’t account for everything else happening in the U.S. economy at the same time, including Chinese imports’ other effects. This methodological issue is really important, because a) the much-ballyhooed 2.4 million job losses (max) came amid an economy‐wide gain of approximately 2.2 million U.S. jobs (even as the labor market effects of the Great Recession persisted beyond 2011); and b) those 1 million lost manufacturing jobs (max) accounted for less than 20 percent of the total manufacturing job losses over the same timeframe—and a tiny fraction of the tens of millions of job separations that occur in the United States each year. Thus, even the China Shock papers themselves confirm that manufacturing job losses caused by Chinese imports were at best a significant contributor to—not the main driver of—total factory job declines during the 2000s.

…..

Second, the original ADH China Shock papers didn’t examine the consumer effects of trade with China for the United States. Other economists have filled this gap, again with more optimistic results. Xavier Jaravel and Erick Sager, for example, found that for each percentage point increase in Chinese imports, consumer prices fell by nearly 2 percentage points, with savings from both imports and domestically produced goods (thanks to heightened competition). Notably, middle‐ and low‐income households enjoyed a disproportionate amount of these benefits, as the most affected products were those often sold at big‐box retailers, such as Target and Walmart. As the 2024 Economic Report of the President also just noted, other studies have found Chinese imports to have provided similar reductions in consumer prices—“almost 90 percent of the U.S. population saw an increase in purchasing power”—as well as significant benefits for American manufacturers that consume imported inputs.

David Henderson is correct: High IQ and grasp of factoids isn’t sufficient to make someone a sound thinker.

Amar Bhidé tells “the boring truth about AI.”

And here are thoughts from Arnold Kling on Bhidé’s piece.

Freddie Sayers talks with Harvard Law professor Randall Kennedy about DEI.

C. Jarrett Dieterle reports on Minneapolis’s assault on gig workers and consumers. A slice:

In response to the council’s override, ride-sharing companies like Uber and Lyft have announced they are planning to pull out of the Minneapolis market entirely unless the council reverses course. The ride-share companies originally were set to leave the city on May 1 when the ordinance went into effect, but after a last-minute agreement by the council to delay the ordinance’s effective date to July 1, the ride-share companies are in wait-and-see mode.

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… is from page 233 of F. A. Hayek’s March 1945 essay, in Fortune, “Review of Sir William Beveridge’s Full Employment in a Free Society,” as this essay is reprinted as Chapter 12 of Hayek, Contra Keynes and Cambridge (Bruce Caldwell, ed., 1995), which is volume 9 of The Collected Works of F.A. Hayek:

It is the great merit of democracy that the demand for the cure of a widely felt evil can find expression in an organized movement. That popular pressure might become canalized in support of particular theories that sound plausible to the ordinary man is one of its dangers.

DBx: So true.

There is today a superabundance of policy ideas that sound plausible to ordinary men and women but that, upon inspection with sound economics, are revealed as crackpot. These ideas include minimum-wage legislation as a means of improving the lives of poor workers, protective tariffs as a means of enriching the people of the nation, and ever-increasing funding for government schools as a means of providing better education.

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History has yet to produce a foe of protectionism who is at once as skilled, as sharp, as logical, as consistent, as gripping, as unrelenting, as informed, as indomitable, as astute, and as entertaining as was Frédéric Bastiat. And while it’s folly to try to single out any one essay of Bastiat’s that is most effective at exposing the idiocy of protectionism, at least it’s possible – and worthwhile – to highlight a few of his essays that deserve special attention. Today I highlight Bastiat’s December 1847 essay “L’indiscret,” translated into English by David Hart as “The Man who asked Embarrassing Questions,” which is ES3-12, pp. 309-318, of Liberty Fund’s 2017 expanded English-language edition, brilliantly edited by David Hart, of Frédéric Bastiat’s indispensable work Economic Sophisms and “What Is Seen and What Is Not Seen.”

Pasted below is the first part of the essay, but do read the entire thing. It offers against protectionism an argument that is unanswerable.

Protection for national industry! Protection for national employment! You have to have a very warped mind and a heart that is truly perverse to decry a notion that is so fine and good.

Yes, certainly, if we were fully convinced that protection, as decreed by the Chamber with its double vote, had increased the well-being of all Frenchmen, including ourselves, if we thought that the ballot-box of the Chamber with its double vote that is more miraculous than the urn in Cana, had operated the miracle of the multiplication of foodstuffs, clothing, the means of work, transport and education, in a word, everything that composes the wealth of the country, we would be both foolish and perverse to demand free trade.

And why, in this case, would we not want protection? Well, Sirs, demonstrate to us that the favors it accords to some are not given at the expense of others; prove to us that it does good to everyone, to landowners, farmers, traders, manufacturers, artisans, workers, doctors, lawyers, civil servants, priests, writers or artists. Prove this to us and we promise you that we will align ourselves under its banner for, whatever you say, we are not yet mad.

And, as far as I am concerned, to show you that it is not through caprice or thoughtlessness that I have engaged myself in the struggle, I will tell you my story.

Having read widely, meditated deeply, gathered a host of observations, followed the fluctuations in the market in my village from week to week and carried out a lively correspondence with a number of traders, I finally arrived at the knowledge of this phenomenon:

WHEN SOMETHING IS SCARCE, ITS PRICE RISES.

From which I considered I might, without excessive boldness, draw the following conclusion:

PRICES RISE WHEN AND BECAUSE THINGS ARE SCARCE.

With this discovery in my pocket, which ought to bring me as much fame as Mr. Proudhon expects from his famous formula: Property is theft, I mounted my humble steed like a new Don Quixote and went off to campaign.

First of all, I introduced myself to a wealthy landowner and asked him:

“Sir, be so good as to tell me why you are so attached to the measure taken in 1822 by the Chamber with its double vote with regard to cereals?”

“Heavens, it is obvious! It is because it enables me to sell my wheat better.”

“Therefore you think that, between 1822 and 1847, the price of wheat has on average been higher in France thanks to this law than it would have been without it?”

“Yes, certainly I think so; if not, I would not support it.”

“And if the price of wheat has been higher, it must have been because there has not been as much wheat in France under this law as without it, for if it had not affected quantity it would not have affected the price.”

“That goes without saying.”

I then drew from my pocket a notebook on which I wrote these words:

“On the admission of the landowner, for the last twenty-nine years in which the law has existed there has, in the end, been LESS WHEAT in France than there would have been without the law.”

I then went to a cattle farmer.

“Sir, would you be so good as to tell me why do you support the restriction placed on the entry of foreign steers by the Chamber with its double vote?”

“It is because, through these means, I sell my steers for a higher price.”

“But if the price of steers is higher because of this restriction, this is a certain sign that fewer steers have been sold, killed and eaten in the country in the last twenty-seven years than would have been the case without the restriction?”

“What a question! We voted for the restriction solely for this reason.”

I wrote the following words in my notebook:

“On the admission of the cattle-breeder, for the last twenty-seven years in which the restriction has existed, there have been FEWER STEERS in France than there would have been without the restriction.”

I then hurried off to an ironmaster.

“Sir, would you be so good as to tell me why you defend the protection that the Chamber with its double vote has accorded to iron so valiantly?”

“Because, thanks to it, I sell my iron for a higher price.”

“But then, also thanks to it, there is less iron in France than if it had not meddled in this, for if the quantity of iron on offer had been equal or greater, how would the price have been higher?”

“It is quite straightforward that the quantity is less, since the precise aim of this law was to prevent an invasion.”

And I wrote on my tablets:

“On the admission of the ironmaster, for twenty-seven years, France has had LESS IRON through protection than it would have had through freed trade.”

“It is all starting to become clear”, I said to myself, and I hurried off to a woolen cloth merchant.

“Sir, would you allow me a small item of information? Twenty-seven years ago, the Chamber with its double vote, of which you were a member, voted for the exclusion of foreign woolen cloth. What was its and your reason for doing this?”

“Do you not understand that it is so that I can make more profit from my woolen cloth and become rich more quickly?”

“That was my guess. But are you sure that you have succeeded? Is it certain that the price of woolen cloth has been higher during this period than if the law had been rejected?”

“There can be no doubt of this. Without the law, France would have been swamped with woolen cloth and the price would have become very low; this would have been a major disaster.”

“I don’t yet see that it would have been a disaster, but be that as it may, you must agree that the result of the law has been to ensure that there has been less woolen cloth in France?”

“This has not been not only the result of the law but its aim.”

“Very well”, said I and I wrote in my notebook:

“On the admission of the manufacturer, for the last twenty-seven years there has been LESS WOOLEN CLOTH in France because of prohibition.”

It would take too long and be too monotonous to go into further detail on this curious voyage of economic exploration.

Suffice it to say that I visited in succession a shepherd who sold wool, a colonial plantation owner who sold sugar, a salt manufacturer, a potter, a shareholder in coalmines, a manufacturer of machines, farm implements and tools, and everywhere I obtained the same reply.

I returned home to review my notes and put them into order. I can do no better than to publish them here.

“For the last twenty-seven years, thanks to the laws imposed on the country by the Chamber with its double vote, there has been in France:

Less wheat,

Less meat,

Less wool,

Less coal,

Fewer candles,

Less iron,

Less steel,

Fewer machines,

Fewer ploughs,

Fewer tools,

Less woolen cloth,

Less canvas,

Less yarn,

Less calico,

Less salt,

Less sugar,

And less of all the things that are used to feed, clothe and house men, to furnish, heat and light their dwellings, and to fortify their lives.

By the Good Lord in Heaven, I cried, since this is the case, FRANCE HAS BEEN LESS WEALTHY.

In my soul and conscience, before God and men, on the memory of my father, mother and sisters, on my eternal salvation, by all that is dear, precious, sacred and holy on this earth and in the next, I believed that my conclusion was accurate.

And if anyone proves the contrary to me, not only will I abandon any argument on these subjects but I will abandon any argument on anything at all, for what trust might I place in any argument if I was unable to have confidence in this?

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Trump, Fauci, Pence – they and many other government officials deserve harsh criticism for covid lockdowns. But as this video by Rob Montz makes clear, especially harsh criticism was earned by Dr. Deborah Birx. (Scott Atlas, in contrast, is heroic.)

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George Will exposes the arrogance and folly of Biden’s EV diktats. Two slices:

Government’s language often radiates contempt for the governed, as when the Environmental Protection Agency recently said limits on automobile emissions in model years 2027-2032 will “give drivers more clean vehicle choices.” The regulations are, of course, explicitly intended to restrict consumers’ choices by forcing manufacturers to produce fewer cars that have tailpipe emissions. Drivers will be able to choose any vehicle they want — from the “clean” category government prefers. As Henry Ford reportedly said, the Model T would be available in “any color” the customer wants, “as long as it’s black.”

The Biden administration’s costly and coercive crusade to replace internal combustion vehicles (ICVs) with electric vehicles (EVs) is disproportionate to its minuscule climate impact. The American Enterprise Institute’s Benjamin Zycher says the EPA’s own assumptions project that the new regulations will mitigate global warming by 0.023 degrees Celsius by 2100. Because the standard deviation of the Earth’s surface temperature record is 0.11 degrees Celsius, “that effect would not be detectable.”

…..

Winter is unkind to EVs: Cold slows the batteries’ chemical reactions. Some drivers who joined lines at charging stations with (supposedly) ample miles of remaining battery capacity had to be pushed, after long waits (high-speed chargers are slow — 30 to 60 minutes — compared with five-minute gas fill-ups), to the chargers. Hot weather, too, makes the chemical reactions less efficient.

Spring, however, is Goldilocks season for EVs — neither too hot nor too cold. And soon, perhaps, government regulations will require temperatures to be mild, always and everywhere.

GMU Econ alum Dominic Pino observes that “the connection between CHIPS and Solyndra is stronger than you might think.”

Also from GMU Econ alum Dominic Pino is this exposé of Sen. J.D. Vance’s (R-OH) almost comical ignorance – or hypocrisy.

Donald Devine explains how “big-government welfare crowds out beneficial social behavior.”

Reason‘s Eric Boehm reports on the gross disconnect between the reality of the U.S. tax burden and the public’s perception of that burden. A slice:

Other surveys show that many Americans have a low level of tax literacy. A recent survey conducted by the Tax Foundation found that “most Americans are not just unhappy with the current tax code but also do not understand it.” One commonly misunderstood aspect is how much the wealthiest Americans pay in taxes every year. In the Tax Foundation survey, 78 percent of respondents did not know the share of taxes paid by the wealthiest 1 percent of Americans—but, tellingly, 65 percent of respondents said their own taxes were too high.

The most straightforward conclusion here is hardly a surprising one. Americans want someone else—preferably someone richer—to pay for the cost of government.

Here’s the good news: That’s already happening!

Bob Graboyes muses on “God, probability, time, and turpentine.”

The Acton Institute’s John Pinheiro praises profits earned in the free market.

David Henderson points out that the Pregnancy Discrimination Act reduces women’s freedom.

Juliette Sellgren talks with Matt Mitchell about socialism in Estonia.

Clark Packard and Alfredo Carrillo Obregon show that Washington’s lofty rhetoric is belied by its misguided economic policies. A slice:

And insofar as Biden’s opposition to the steel deal is for national security purposes, it clashes with the state of US‐​Japan defense cooperation, which has been close for decades and, as stated during the visit, is planned to increase in the coming years. Indeed, Japan hosts US military personnel and Department of Defense (DOD) civilians and their families and acquires more than 90 percent of its defense imports from the US; Japanese investors have not been of concern to the Committee on Foreign Investment in the United States (CFIUS) (which is currently reviewing the Nippon‐​US Steel deal) since the 1980s; and Nippon Steel is no longer closely connected to the Japanese government. Twenty‐​three percent of the company is owned by non‐​Japanese entities.

In sum, most independent observers understand that Biden’s opposition is motivated by electoral politics—as is Donald Trump’s own opposition to the deal—and not economics or national security.